Digital Media launch
Reasons for hope emerging…
Consumer-led recession creates a large overhang on the sector, but reasons for
optimism are building
The digital media industry is largely dependent on discretionary consumer spending
and therefore seen as materially “at risk” during this consumer-led recession. More
recently, however, several macro indicators are suggesting the worst may be over.
Notable product cyclicals include:
Mobile consumption of content, IPTV and direct streaming to CE devices, digital
broadcasting upgrade and the high definition experience, "connected" home and
gaming, creation and sharing of content.
Eight digital media names now under coverage
We have assumed or initiated coverage on eight digital media names. We remain
neutral on the sector and believe investors should look at established market leaders
first. We continue to track macro economic variables for signs of improving demand.
Our ratings:
• BUY rating on Dolby Laboratories (DLB : NYSE : $34.68), Macrovision Solutions
(MVSN : NASDAQ : $18.81) and Nuance Communications (NUAN : NASADQ :
$12.58)
• HOLD rating on Monotype Imaging Holdings (TYPE : NASDAQ : $4.00), DivX (DIVX
: NASDAQ : $5.75), RealNetworks (RNWK : NASDAQ : $2.49) and Avid Technology
(AVID : NASDAQ : $10.00)
• SPECULATIVE BUY on The Orchard Enterprises (ORCD : NASDAQ : $1.81)
Inside
Macro perspectives 2
Industry analysis 4
Industry trends 11
Consumer electronics 18
Growth catalysts 31
Key risks 32
Key developments 33
Digital Media Index 35
Company overviews
Dolby Laboratories 37
Macrovision Solutions 51
Avid Technology 63
RealNetworks 75
Nuance Communications 87
Monotype Imaging Holdings 100
DivX 107
The Orchard 117